MSC Posts Guarantee to Release Vessel as India Pursues Compensation Claims
Eight months after the loss of the MSC Elsa 3 off the coast of India, MSC Mediterranean Shipping Company has posted a bond with the Kerala High Court as the government continues to pursue its compensation claims. The bond was accepted in December and permitted the release of an MSC containership that had been detained since July to protect the claim.
The Kerala state government filed a claim of more than $1 billion, asserting that there had been significant environmental damage after the containership MSC Elsa 3capsized and went down about 13 nautical miles off the coast. An extensive diving operation was mounted to seal the leaking fuel tanks and later to pump fuel from the ship. Containers also washed ashore along the coast.
MSC’s lawyers have been contesting the claim as excessive. They estimated to the court that the actual damages were approximately $15.1 million.
The High Court ordered the MSC Akiteta IIdetained at the port of Vizhinjam on July 7 as collateral against the claim. It demanded a cash bond to release the vessel, with the two sides debating the form and amount of the bond. MSC had proposed to the court a bank guarantee of approximately $136.3 million from a private bank. The government had demanded a cash deposit into an interest-bearing account to protect the value for the claimants.
The court ruled that a bank guarantee was acceptable, and MSC posted the private bank guarantee in the second week of December. The court finally ordered the release of the MSC vessel, which had been held in the port for more than five months. The ship is now underway in the Indian Ocean.
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Indian media reports say that the court has ordered the next compensation hearing for February 13, related to the claims by Kerala. MSC is also facing other claims from the fishing community and others that assert direct financial losses in the aftermath of the vessel’s loss.
The MSC Akiteta II was one of several vessels the court held against the different claims. The other detentions, however, had been addressed with smaller bonds for the individual cases. The large value of the state’s claim created additional challenges, which had left the vessel and its crew stranded in the Indian port.
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